Facts of the Case

Suraj Shoe House, a small footwear business, was subjected to an inspection on 08.06.2022, following which it received a show cause notice demanding IGST of Rs.6,48,86,945/- with 15% interest and equal penalty, plus a further demand for sales suppression under CGST and SGST, and a penalty of Rs.10,000 each under Section 122 of the Bihar GST Act for non-issuance of tax invoices and non-maintenance of sale registers. The petitioner claimed that his GST portal credentials were hacked after December 2021, that an unknown person filed a GSTR-1 return for January-March 2022 disclosing invoice values exceeding Rs.40 crore, and sought to cross-examine the alleged buyers, without having filed a statutory appeal against the resulting orders dated 25.11.2022 and 29.11.2022.

Issues Involved

  1. Whether the writ petition was maintainable in the face of an unavailed statutory appellate remedy under Section 107 of the BGST Act.
  2. Whether the petitioner's claim of hacking and fraud, raised for the first time in the writ petition, was substantiated.

Petitioner's Arguments

  • A complaint of hacking of the petitioner's GST credentials had been registered with the department but had not been inquired into, and the petitioner was a victim of fraud requiring detailed investigation and cross-examination of alleged sellers/buyers.

Respondent's Arguments

  • The orders of assessment and penalty were passed following inspection and due process, and the petitioner had an appellate remedy under Section 107 of the BGST Act which was never availed.

Court Order / Findings

  • Section 107(4) prescribes a three-month limitation with a further one-month condonable period; where the statute itself provides a specific limitation and condonation scheme, Section 5 of the Limitation Act does not apply, and any appeal filed beyond that period cannot be entertained -- rendering the writ petition against the assessment and penalty orders not maintainable.
  • On the fraud allegation, the petitioner had not raised the hacking complaint before the date of inspection, could not produce stock or purchase registers when inspected, and had not named the persons he wished to cross-examine even in the writ petition.
  • An unsubstantiated allegation of fraud or hacking, raised only after an adverse inspection and without any pre-existing complaint or supporting material, will be treated as an afterthought and cannot justify bypassing the statutory appellate remedy or entertaining a writ petition against orders of assessment and penalty.
  • The writ petition was dismissed for both bypassing the appellate remedy and the unsubstantiated nature of the fraud allegation.

Important Clarification

  • A claim of GST portal credential hacking, to be credible, must be supported by a complaint made contemporaneously with or before the triggering event (such as a departmental inspection), and named allegations against specific persons; absent such support, courts will treat the claim as an afterthought and will not entertain a writ petition against assessment orders where the statutory appeal under Section 107 was never availed within its limitation and condonable period.

Sections Involved

  • Section 122, BGST Act, 2017 - penalty for non-issuance of tax invoices and other specified contraventions.
  • Section 107, BGST Act, 2017 - appeal to Appellate Authority, with limitation and condonable period.

Decision – In Favour of

The writ petition was dismissed, in favour of the Department.

Case Details

Court: High Court of Judicature at Patna
Case No.: Civil Writ Jurisdiction Case No.3769 of 2023
Coram: Chief Justice K. Vinod Chandran and Justice Madhuresh Prasad
Date of Order: 26.04.2023

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